MP sits in the studio as a psuedo-conductor. JP and JR come up with the music, and Portnoy sits there (I am assuming, based on everything I've observed over the years that has been publicly released) and says "no, try it this way," "no, do it that way," etc. And yes, he has a hand in arranging the songs.
That is, in a nutshell, directing the band's artistic approach. He may not come up with the music, but he has a very large hand in shaping where it goes, arguably the biggest hand in it.
I would LOVE, LOVE, if MP just said "ok, on this record, I am not doing ANYTHING except playing drums and writing some lyrics." you guys have at it. Let me know when you've got some stuff for me to play drums on.
He would never do that in a million years, but I wish he would. No disrespect at all to MP. He's done a world of good in many areas of the band. But I'd love for him to step back for awhile and see what happens. He'd have to truly "let go" though. And he's said before, he'll never do that again.